Carnival Corporation may slip into the red in the fourth quarter as the result of higher fuel costs and a decline in forward bookings.
The world’s biggest cruise conglomerate said it expected fourth quarter results to range from a loss of 3 cents a share to a profit of 3 cents against 14 cents per share for the same time last year.
Advance bookings for the remainder of this year and the first half of 2014 are behind 2012 at prices in line with last year’s levels.
Fleetwide bookings for the next three quarters since June, excluding Carnival Cruise Lines, are running in line with 2012 at higher prices.
Bookings for Carnival Cruise Lines during the same period are running behind the prior year at lower prices, the company said.
Announcing third quarter profits down to $934 million from $1.3 billion in the same period last year, Carnival Corporation’s new president and chief executive Arnold Donald said the company made “significant progress” on a number of strategic initiatives to broaden its customer base, spur additional demand and mitigate environmental impacts and higher fuel costs.
The three months to the end of August included $203 million in write-down costs related to two smaller Costa ships, which are due to be laid up or sold, and other impairment charges.
A continued improvement in net revenue yields for Costa partially offset lower net revenue yields for the corporation’s North American and Northern European brands in the peak summer quarter.
Donald said: “While some of our current challenges and cost pressures will continue well into next year, we have tremendous opportunities to enhance shareholder value over time.
“We are investing in gaining an even deeper understanding of what drives consumer vacation decisions and onboard enjoyment. This bodes well for attracting first time cruisers as well as powerfully differentiating our brands relative to others.”
Fuel prices in the three months increased by 2.3% to $674 per metric ton, something the group is seeking to mitigate through the introduction of new technology to cut emissions on 32 ships.
Carnival Corporation expects full year profits of $1.51 to $1.57 per share, the mid-point of which is in line with guidance given in June.
Full year 2013 net revenue yields are forecast to be down 3% “due in part to ongoing geopolitical events in portions of the eastern Mediterranean region,” while cruise costs are expected to rise by 4%. Higher fuel prices are expected to reduce full year 2013 earnings by 4 cents per share.
Donald said that Carnival Cruise Lines, which suffered from technical problems on a number of its ships earlier this year including an engine room fire on Carnival Triumph, had seen a “steady improvement” in brand perception in the US in the past few months.
Carnival Cruise Lines continuing to undertake various brand building initiatives in the US including a major travel agent outreach programme, the introduction of a new cruise guarantee earlier this month and a major marketing campaign with national TV advertising.
Princess Cruises recently announced plans to homeport Sapphire Princess in China for a four-month season beginning in May 2014, bringing the total to five vessels in the region next year dedicated to passengers sourced from Asia.
Donald said: “Asia is a key focus of our international expansion. During the third quarter, we opened five additional sales offices in China, following the establishment of a corporate office in Singapore earlier this year.”
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